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Question # 1 For each of the following events, explain both the short-run and long-run effects on i) output (Y), and ii) the price level An increase

Question # 1


For each of the following events, explain both the short-run and long-run effects on i) output (Y), and ii) the price level


  1. An increase in the federal government's military spending
  2. An economic recession in Canada, decreasing the wealth of Canadians, and causing  them to buy fewer US-made goods
  3. The stock market declines, decreasing the wealth of US consumers
  4. The Fed increases the money supply

Top Answer

a) When the government spending increases, it will increase the AD/AS which will make the price to fall in the short run, the... View the full answer

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